commodity investing 101

commodity investing 101

June 9th, 2017

Grain prices struggled to hold their ground as concerns over 100-degree temperatures in the US clashed with forecasts from a much-watched report showing bigger-than-expected stocks of corn, soybeans and wheat ahead.

The US Department of Agriculture, in its much-watched monthly Wasde briefing on world crop supply and demand, raised its estimate for world and US corn and soybean inventories at the close of 2017-18 by more than had been expected.

And while the estimate for US corn stocks was left unchanged, that defied expectations of a decline, although the forecast for world inventories of the grain did fall below the figure the market had expected.

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commodity investing 101

commodity investing 101

January 3rd, 2017

Hedge funds approached the end of 2016 on a bearish note in agricultural commodities, cutting bets on price rises for a fourth successive week, as they stretched to a record a selling spree in softs such as cocoa and coffee.

Managed money, a proxy for speculators, cut its net long position in futures and options in the top 13 US-traded agricultural commodities, from corn to sugar, by 37,457 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.

The selldown reduced the net long – the extent to which long bets, which profit when values rise, exceed short holdings, which benefit when prices fall – to the lowest in two months.

And it included bearish positioning in both grains, in which hedge funds returned to a net short position, as well as in New York-traded soft commodities, which also include cotton and sugar.

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St Elmo Steak House

St Elmo Steak House

May 23rd, 2016

Commodity hedge funds raised bets on rising agricultural commodity prices to the highest in nearly two years, provoking concerns of a sell-off in the off – particularly in sugar, in which bullish betting hit a record high.

Managed money, a proxy for speculators, lifted its net long position in futures and options in the top 13 US-traded agricultural commodities, from corn to sugar, by nearly 65,000 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.

The buying took the net long – the extent to which long bets, which profit when values rise, exceed short holdings, which benefit when prices fall – nearly to 680,000 contracts, the highest since June 2014, and supporting talk around in the market of funds moving cash into ags.

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cocoa options

cocoa options

April 22nd, 2016

Cocoa futures hit fresh 2016 highs, after Asian grinders reported higher-than-expected volumes.

Asian cocoa grinding was up 2.9% in the first three months to 2016, compared to the same time last year, according to data from the Cocoa Association of Asia (CAA).

Grinding, which is treated as a proxy for consumer demand, came in at at 148,911 tonnes.

This was better than market expectations, which pointed to an increase of around 1%.

Cocoa Futures: No drop in Indonesia

Malaysia, Asia’s second-largest cocoa processor, had already reported an increase in grind of 4%.

But markets were uncertain whether that increase represented a real uptick in demand, or simply a shifting of volumes away from Indonesia, the top-ranked grinder.

Friday’s data release makes it clear that Indonesia also saw rising volumes.

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Crude oil futures quotes

Crude oil futures quotes

December 7th, 2015

Crude oil prices fell to their lowest in nearly seven years on Monday after OPEC’s meeting ended in disagreement over production cuts and without a reference to its output ceiling, while a stronger dollar made it more expensive to hold crude positions.

The Organization of the Petroleum Exporting Countries (OPEC) failed to agree in its policy meeting on Friday to lower production in an attempt to stem prices that have dropped more than 60 percent since June 2014.

For the first time in decades, oil ministers dropped any reference to the group’s output ceiling, highlighting disagreement among members about how to accommodate Iranian barrels once Western sanctions are lifted.

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sugar futures brokers

sugar futures brokers

October 26th, 2015

Morgan Stanley restated an upbeat call on corn, soyoil and sugar, based largely on expectations for importer demand, despite the revival in the dollar which will make the commodities more expensive for buyers in other currencies.

The bank acknowledged that, for corn, “near-term weakness” in US export sales may be “exacerbated” by the latest revival in the dollar, spurred by Chinese and eurozone monetary policy moves last week.

US export commitments for corn had, as of October 15, reached 11.88m tonnes for 2015-16, a drop of 35% year on year, according to US Department of Agriculture data.

However, market weakness would not last for ever, with the prospect of a decline in Brazilian shipments to send demand back the way of the US.

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commodity investing 101

commodity investing 101

October 5th, 2015

Commodity investing funds undertook a sharp wave of short-covering as pessimism over agricultural commodity prices waned, particularly in sugar, in which they turned more positive on prospects at the fastest pace in 15 months.

Managed money, a proxy for speculators, lifted its net long position in futures and options in the top 13 US-traded agricultural commodities, from corn to cotton, by 100,285 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.

The shift took the net long – the extent to which long bets, which profit when values rise, exceed short holdings, which benefit when prices fall – to 125,025 contracts.

And it was fuelled by a cut in short positions, of more than 90,000 lots, amid recovering markets for many agricultural commodities, with only cattle and cocoa among main contracts showing losses during the week.

The closure of short positions was evident in a cut to 1.38m lots, from 1.42m contracts, in speculators’ open interest – the total number of live contracts they hold.

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commodity brokers

commodity brokers

October 27th, 2014

Commodities slumped to a five-year low led by agriculture items produced by Brazil on speculation a slump in the country’s currency will fuel exports.

The Bloomberg Commodity Index dropped 0.6 percent at 11:03 a.m. in London after falling to the lowest since July 2009. Raw sugar futures fell 2.3 percent and arabica coffee declined 1.4 percent. Brazil is the biggest producer of both commodities.

Brazil President Dilma Rousseff’s re-election damped speculation for a change in policies, sending the real down 3.2 percent today, the biggest decline since 2011. The real weakened 33 percent against the dollar since Rousseff took office in January 2011. Declines in the Brazilian currency tend to encourage export sales of products traded in dollars.

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commodity brokers

commodity brokers

October 20th, 2014

Commodity Investing – Plunging oil prices spurred hedge funds to cut bullish wagers by the most in six weeks, losing confidence in the willingness of producers to constrict supply.

Money managers cut net-long positions in West Texas Intermediate by 8.1 percent in the week ended Oct. 14. Short positions jumped to the highest level in 22 months, U.S. Commodity Futures Trading Commission data show.

WTI tumbled 8.8 percent this month as U.S. production expanded to a 29-year high. That added to signs of a global supply glut just as the International Energy Agency cut its forecast for demand growth. Crude is now trading in a bear market, underpinned by speculation that OPEC members are favoring market share over prices.

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orange juice futures

orange juice futures

July 29th, 2014

Orange-juice futures slumped to a five-month low on Tuesday as weak demand for the beverage trumped fears of a hurricane damaging Florida’s next crop.

Frozen, concentrated orange juice for delivery in September fell 2.2% to $1.4475 a pound, the lowest closing price since Feb. 19 on the ICE Futures U.S. exchange.

A disturbance in the Atlantic Ocean shows a 70% chance of tropical cyclone formation in the next 48 hours, according to the National Weather Service. Usually, that kind of news boosts the orange-juice market, as previous hurricanes that have hit top orange-producing state Florida have damaged groves and ripped fruit from the trees.

“There still do not appear to be any major storms in sight in the Atlantic to hurt production, but traders will keep an eye on the developments of the system in the Atlantic to see if it grows and what its track might be,” said Jack Scoville, vice president at Price Futures Group in Chicago.

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